UAE's non-oil sector maintains growth momentum: S&P Global

05/03/2025 09:39 AST

The UAE's non-oil private sector continued its steady growth in February, driven by improved business conditions and a rise in new orders, according to S&P Global.

In its latest report, the financial services company revealed that the Emirates' purchasing managers' index stood at 55 in the second month of the year, unchanged from January and marginally down from December's nine-month high of 55.4.

S&P Global highlighted that any PMI reading above 50 signifies the expansion of the private business conditions, while below 50 indicates contraction.

The strong growth of non-oil business activities in the UAE aligns with the broader trend in the Middle East region, where countries are steadily pursuing their economic diversification efforts.

Saudi Arabia recorded a PMI of 58.4 in February, with Kuwait at 51.6 and Egypt at 50.1.

David Owen, senior economist at S&P Global Market Intelligence, said the UAE report showed "another solid month" for non-oil businesses in the country, adding: "A PMI reading of 55.0 suggests that growth has remained relatively steady since its recent high at the end of last year."

According to the analysis, business activity growth gained momentum in February and was stronger than its long-run average of 54.4.

Companies that took part in the PMI survey revealed that output had ramped up in response to rising levels of new business.

The study added that improving market conditions, advertising efforts, and restrained output price pressures boosted demand levels among non-oil private firms last month.

A note of caution was sounded by various non-oil private companies, according to the report, with these firms warning that competition from domestic and foreign sources dampened growth in February.

"The sector is not without its challenges, as highlighted by a limited level of confidence in the year ahead outlook. Firms continue to feel the pressure of intense competition, which has capped price increases," said Owen.

He added: "Growing cost pressures resulted in a slight acceleration in selling price inflation in February. Additionally, businesses are eager to secure new work, which contributed to a rapid accumulation of backlogged orders."

The report further said that employment creation in the UAE's non-oil sector remained limited in February. While some firms hired additional workers to increase their capacity, most companies kept employment unchanged.

"While robust growth in business activity indicates that the pipeline of orders should eventually be addressed, other factors such as weak job creation and administrative delays pose risks to this outlook," said Owen.

He added that non-oil firms in the UAE continued to report difficulties securing client payments and highlighted the necessity to implement effective policy action to address this issue.

In the same report, S&P Global revealed that Dubai's PMI marginally declined to a three-month low of 54.3 in February, down from 55.3 in January, indicating a slower improvement in the health of the Emirate's non-oil sector.

Despite this drop, the overall improvement in Dubai's non-energy sector remained solid, driven by robust expansions in new orders and output.

The analysis added that activity levels at non-oil companies in Dubai reportedly increased in February due to stronger demand and softer price pressures.

The rate of increase in input prices was the softest recorded in four months, resulting in only a fractional uplift in average prices charged.

In February, non-oil firms in Dubai saw business expectations recovering to a three-month high but remained relatively subdued.

Most of the non-energy private companies in Dubai kept their staffing levels unchanged from January, although inventory growth was supported by rising input purchasing.

Arab News